Cur­rently, an SRS mem­ber can with­draw up to $40,000 per year from his SRS account tax-free on or after reach­ing the pre­scribed retire­ment age, assum­ing that he has no oth­er tax­able income. Over the max­im­um with­draw­al peri­od of 10 years, he can with­draw up to $400,000 tax-free.
How­ever, if an SRS mem­ber passes away before com­plet­ing his SRS with­draw­als or made a full with­draw­al on the grounds of ter­min­al ill­ness, he would not be able to enjoy the full bene­fit from spread­ing out his SRS with­draw­als over a 10-year peri­od. Hence, from year of assess­ment 2016, a tax exemp­tion of up to $400,000 would be gran­ted for SRS funds deemed with­drawn upon an SRS member’s demise or a with­drawn in full on the grounds of ter­min­al ill­ness.

Next, from July 2015, SRS mem­bers will be able to apply to their SRS oper­at­ors to with­draw an SRS invest­ment by trans­fer­ring the invest­ment out of their SRS accounts (e.g. into their per­son­al Cent­ral Depos­it­ory (CDP) account), without hav­ing to liquid­ate their SRS invest­ments. This is only applic­able for the fol­low­ing types of with­draw­als, which qual­i­fy for the 50% tax con­ces­sion:

with­draw­al on or after the stat­utory retire­ment age pre­vail­ing at the time of an SRS member’s first con­tri­bu­tion (cur­rently age 62);

with­draw­al on med­ic­al grounds;

with­draw­al in full by a for­eign­er who has main­tained his SRS account for at least 10 years from the date of his first con­tri­bu­tion; and

actu­al with­draw­al made by an SRS mem­ber or his leg­al per­son­al rep­res­ent­at­ive (if he is deceased) from his SRS account, after the SRS invest­ment that is to be with­drawn had earli­er been deemed with­drawn upon death or after the expiry of the 10-year with­draw­al peri­od.

All oth­er with­draw­als from an SRS account, includ­ing pre­ma­ture with­draw­als, must be made in cash.

Infla­tion in Singa­pore fell 0.6% year-on-year in Decem­ber, com­pared to -0.8% in Novem­ber. Core infla­tion, which excludes the cost of accom­mod­a­tion and private road trans­port, rose to 0.3% from 0.2% in Novem­ber.

Private road trans­port cost fell by 1.1% in Decem­ber, com­pared to the 1.7% decline in Novem­ber. Accom­mod­a­tion cost dropped by 3% in Decem­ber, same as the decline in Novem­ber. How­ever, over­all ser­vices infla­tion increased to 0.9% in Decem­ber, up from 0.7% in Novem­ber, due to a faster pace of increase in hol­i­day travel expenses and a smal­ler decline in tele­com­mu­nic­a­tion ser­vices fees. Mean­while, food infla­tion was down to 1.5% last month from 1.6% in Novem­ber, due to the mod­er­a­tion of increase in prices of pre­pared meals such as hawker food.

For the whole of 2015, infla­tion fell by -0.5%, down from 1% in 2014. This is the first decline since 2002. Core infla­tion eased to 0.5% in 2015, com­pared to the 1.9% in 2014.
Core Infla­tion is expec­ted to be between 0.5% and 1.5% in 2016 while over­all infla­tion is pro­jec­ted to aver­age between -0.5% and 0.5% in 2016, accord­ing to MAS and MTI.

CPFCELINGCPF con­tri­bu­tion ceil­ing will be increased from $5000 to $6000 with effect from 1 Jan 2016. This will help to boost anoth­er $170 from employ­er and $200 from employ­ee for those earn­ing more than $6000 monthly salary and below 55 years old. Though the take-home pay for these employ­ees will reduce by $200, the sav­ings for retire­ment will be boos­ted by these extra sav­ings.

CPFCONTRIBUTIONRATE
The CPF con­tri­bu­tion rate for employ­ee 50 years and above will be increased from 1 Janu­ary 2016.

Above 50 to 55, employ­er CPF rate will be increased from 16% to 17%, while employ­ee CPF rate will be increased from 19% to 20%;

Above 55 to 60, employ­er CPF rate will be increased from 12% to 13%, with no change to the cur­rent employ­ee CPF rate of 13%;

Above 60 to 65, employ­er CPF rate will be increased from 8.5% to 9%, with no change to the cur­rent employ­ee CPF rate of 7.5%.

In addi­tion, for CPF mem­bers aged 55 and above from 1 Janu­ary 2016, the first $30,000 from the CPF accounts will earn extra 1% per annum, on top of the cur­rent 1% extra interest on the first $60,000 of their total CPF sav­ings. That is,

Total CPF bal­ance

Interest Rate

If in Special/Retirement/Medisave Accounts

If in Ordin­ary Account

First $30,000

6%

4.5%

Next $30,000

5%

3.5%

Remain­ing bal­ance above $60,000

4%

2.5%

This trans­lates to extra $300 sav­ings per year for the next 10 years before CPF Life pay­out starts at 65. Assum­ing the yearly $300 interest earned goes into the Retire­ment Account which earns 4% interest, this trans­lates to $3,745 after 10 years. With high­er amount in CPF Retire­ment Account, CPF mem­bers can expect high­er pay­out from their CPF Life.

SUPPLEMENTARYRETIREMENTSCHEME
The caps on con­tri­bu­tion to the vol­un­tary retire­ment sav­ings scheme, Sup­ple­ment­ary Retire­ment Scheme (SRS) will be increased from 1 Janu­ary 2016. For Singa­por­ean and Per­man­ent Res­id­ent, the cap will be increased from $12,750 to $15,300. The cap for for­eign­er will be increased from $29,750 to $35,700. This will help to increase the per­son­al income tax sav­ings, as the amount put into SRS will enjoy tax relief. Moreover, retire­ment cash­flow will be improved when SRS money is allowed to be with­drawn without pen­alty from age 62 onwards.

Nation-wide hos­pit­al­iz­a­tion plan, MediShield Life, will be imple­men­ted on 1 Novem­ber 2015. Min­istry of Health has already iden­ti­fied 25,000 Singa­pore Cit­izens and Per­man­ent Res­id­ents with ser­i­ous pre-exist­ing ill­nesses who will have to pay extra 30% extra premi­um for the next 10 years to cov­er the pre-exist­ing ill­nesses. After which, they would pay the same premi­ums as their peers. If you belong to this group, you will receive a let­ter with details about your new MediShield Life cov­er­age, premi­ums and sub­sidies, includ­ing the Addi­tion­al Premi­ums. The vari­ous sub­sidies for MediShield Life premi­ums will also apply to Addi­tion­al Premi­ums.

If you cur­rently not insured with Medishield, you will also receive the let­ter soon to inform you on the premi­ums and sub­sidies. For oth­ers, you will only receive the let­ter one month before your plan is due for annu­al renew­al from either the CPF Board (cov­er under MediShield) or your private insurer (cov­er under Integ­rated Shield Plan) with details about your premi­ums and sub­sidies for the MediShield Life com­pon­ent of your Integ­rated Shield Plan.

Those whose pre-exist­ing con­di­tions are less ser­i­ous or are well-con­trolled, such as well-con­trolled dia­betes, or hyper­ten­sion with no com­plic­a­tions, osteoarth­rit­is, pre-can­cers, fibroids or cysts or those who were hos­pit­al­ized due to a one-off event, such as an acci­dent or dengue are not sub­jec­ted to the 30% addi­tion­al premi­um.

The first Singa­pore bond was opened for applic­a­tion on 1st Septem­ber 2015 and will close on 25 Septem­ber 2015, 9pm. The total amount for this alloc­a­tion is $1.2 bil­lion.

You can apply in mul­tiples of $500 up to $50,000 through DBS/POSB, OCBC or UOB ATMs, or through DBS/POSB’s Inter­net Bank­ing portal. You will also need to have the indi­vidu­al CDP Secur­it­ies account linked to any of your bank accounts as CDP is the cus­todi­an for Sav­ings Bonds and it will pro­cess the applic­a­tions, interest pay­ments and redemp­tions. You may vis­it CDP’s webpage for inform­a­tion on open­ing your CDP Secur­it­ies account.

The alloc­a­tion will be con­duc­ted on 28th Septem­ber 2015 and the bonds will be issued on 1 Octo­ber 2015. The interest will be paid on 1st April and 1st Octo­ber every year till matur­ity date on 1 Octo­ber 2025. The interest for 1st year is 0.96% p.a., and 1.09% p.a. on second year. It will increases to 3.70% p.a. on the 10th year. So if you hold for 10 years till matur­ity, the com­poun­ded interest rate is 2.63%p.a.

Singa­pore Gov­ern­ment will issue the Singa­pore Sav­ings Bond every month. The applic­a­tion peri­od is always 1st of the month till the 4th last busi­ness day of the month. Alloc­a­tion of the bonds will be con­duc­ted on the 3rd last busi­ness day of the month and res­ults will be pub­lished on its web­site after 3pm. Should the total amount of applic­a­tions exceed the amount on offer in a par­tic­u­lar month, you may not get the full amount you applied for. The excess cash will be refun­ded to you by the end of the 2nd last busi­ness day of the month. Sav­ings Bonds will be issued on the 1st busi­ness day of the fol­low­ing month. You will be noti­fied by CDP via mail of the amount of Sav­ings Bonds allot­ted to you. You can also check your hold­ings online through the CDP Inter­net ser­vice or by call­ing CDP at 6535–7511. The total amount of Sav­ings Bonds held across all issues can­not be more than $100,000.

You will receive the first interest pay­ment 6 months after the bond is issued. Interest will be auto­mat­ic­ally paid into the bank account that is linked to your CDP account. Interest will be paid every six months after that, on the 1st busi­ness day of the month. The interest pay­ments will be reflec­ted in your CDP state­ments.

There is a $2 trans­ac­tion fee for any trans­ac­tion such as applic­a­tion and redemp­tion of the bond.

You can redeem in mul­tiples of $500 on the 1st busi­ness day of each month till the 4th last busi­ness days of the month without pen­alty. Redemp­tion pro­ceeds will be paid by the end of the 2nd busi­ness day of the fol­low­ing month. If you redeem before the sched­uled interest is paid, you will receive a pro-rated amount, which is the interest you have earned but have not been paid.

Retire­ment sav­ings is set to increase from the recent announce­ment of Singa­pore Budget 2015 by Deputy Prime Min­is­ter and Fin­ance Min­is­ter, Mr Thar­man Shan­mugar­at­nam.

First, the CPF ceil­ing will be increased from $5000 to $6000 with effect from 1 Jan 2016. This will help to boost anoth­er $170 from employ­er and $200 from employ­ee for those below 55 years old. Though the take-home pay for employ­ee will reduce by $200, the sav­ings for retire­ment will be boos­ted by these extra sav­ings.

Next, theCPF con­tri­bu­tion rate for employ­ee 50 years and above will be increased from 1 Janu­ary 2016 as fol­lows:

Age

Employ­er CPF Rate

Employ­ee CPF Rate

Above 50 to 55

Increase from 16% to 17%

Increased from 19% to 20%

Above 55 to 60

Increase from 12% to 13%

No change, remain at 13%;

Above 60 to 65

Increase from 8.5% to 9%

No change, remain at 7.5%.

In addi­tion, for CPF mem­bers aged 55 and above from 1 Janu­ary 2016, the first $30,000 from the CPF accounts will earn extra 1% per annum, on top of the cur­rent 1% extra interest on the first $60,000 of their total CPF sav­ings. That is,

Total CPF bal­ance

Interest Rate

If in Special/Retirement/Medisave Accounts

If in Ordin­ary Account

First $30,000

6%

4.5%

Next $30,000

5%

3.5%

Remain­ing bal­ance above $60,000

4%

2.5%

This trans­lates to extra $300 sav­ings per year for the next 10 years before CPF Life pay­out starts at 65. Assum­ing the yearly $300 interest earned goes into the Retire­ment Account which earns 4% interest, this trans­lates to $3,745 after 10 years. With high­er amount in CPF Retire­ment Account, CPF mem­bers can expect high­er pay­out from their CPF Life.

Lastly, the caps on con­tri­bu­tion to the vol­un­tary retire­ment sav­ings scheme, Sup­ple­ment­ary Retire­ment Scheme (SRS)will be increased from 1 Janu­ary 2016. For Singa­por­ean and Per­man­ent Res­id­ent, the cap will be increased from $12,750 to $15,300. The cap for for­eign­er will be increased from $29,750 to $35,700. This will help to increase the per­son­al income tax sav­ings, as the amount put into SRS will enjoy tax relief. Moreover, retire­ment cash­flow will be improved when SRS money is allowed to be with­drawn without pen­alty from age 62 onwards.

You may wish to refer to the fol­low­ing arti­ciles I wrote pre­vi­ously to learn more about Retire­ment Plan­ning and bene­fits of Sup­ple­ment­ary Retire­ment Scheme.

CPF Advis­ory Pan­el that was set up in Septem­ber 2014 has just released the part 1 of their recom­mend­a­tion on CPF changes. These changes are likely to take place in 2016 as all fig­ures stated are in 2016 dol­lars.

CPF Retire­ment Sum
There will be 3 tiers of retire­ment sum that a CPF mem­ber can set aside. The first basic tier is called the Basic Retire­ment Sum, $80,500 in 2016. Mem­ber will expect to get $650 to $700 monthly pay­outs from age 65 onwards for life. How­ever, this tier only applies to house own­er who has pledged his prop­erty. There­fore, if the mem­ber sells his prop­erty, the amount of the pledge will be returned to his CPF to sup­ple­ment his basic pay­out, par­tic­u­larly if he now needs to pay rent on his accom­mod­a­tion.

CPF Mem­ber who does not own his home should set aside the Full Retire­ment Sum at two times the BRS, or $161,000 in 2016. This will trans­late to $1200 to $1300 monthly pay­outs from age 65 onwards.

For those who wish to get high­er pay­outs dur­ing their retire­ment, they can set aside Enhanced Retire­ment Sum of $241,500, which is three times the Basic Retire­ment Sum. The estim­ated monthly pay­out will be between $1750 and $1900. CPF mem­ber can do so by top­ping up his retire­ment account with his CPF sav­ings or cash.

From 2017, the Basic Retire­ment Sum will increase at 3% p.a. till 2020 to factor in infla­tion and high­er cost of liv­ing.

CPF Lump Sum With­draw­al

CPF mem­ber will now be allowed to with­draw 20% of their Retire­ment Account Sav­ings at the Pay­out Eli­gib­il­ity Age, pre­vi­ously known as Draw­down Age. This with­draw­al amount includes the $5000 they were eli­gible to with­draw from age 55.

Oth­ersCPF mem­ber can also delay the Pay­out Eli­gib­il­ity Age till 70, and to expect to get 6% to 7% more monthly pay­outs for each year deferred.

CPF mem­ber can also trans­fer amounts in excess of the Basic Retire­ment Sum of $80,500 to his fam­ily member’s Spe­cial Account or Retire­ment Account. This is espe­cially import­ant for a house­wife who has low CPF sav­ings and thus depend­ent on her hus­band CPF Life pay­outs, as women tend to out­live their hus­bands.

The CPF Advis­ory Pan­el will con­tin­ue its stud­ies on altern­at­ive private invest­ments and annu­it­ies and intro­duce a CPFLIFE plan with an escal­at­ing pay­out struc­ture. The recom­mend­a­tion is expec­ted to be ready by mid-2015.

Infla­tion was neg­at­ive 0.2% in Decem­ber 2014, com­pared to Decem­ber 2013. This was due mainly to fluc­tu­ations in cer­ti­fic­ate of enti­tle­ment premi­ums, soft hous­ing rent­al mar­ket and cheap­er oil.
This is the second con­sec­ut­ive month that Singa­pore encoun­ters defla­tion, with the index at -0.3% in Novem­ber 2014.

Core infla­tion, which excludes the cost of accom­mod­a­tion and private road trans­port, how­ever, remained at 1.5% in Decem­ber 2014. Food and pre­pared meals were the largest pos­it­ive con­trib­ut­ing factor to infla­tion in Decem­ber 2014.

The over­all infla­tion in 2014 is 1%, com­pared with 2.4% in 2013, the low­est since 2009. The core infla­tion in 2014 increased to 1.9% from 1.7% in 2013.

Offi­cial fore­casts for head­line infla­tion is between 0.5% to 1.5%, while the core infla­tion is between 2% to 3% in 2015.

With effect from 1 April 2015, a patient who is aged 65 and above can use up to $200 a year from the Medis­ave sav­ings to pay for the fol­low­ing ser­vices:-
a) Out­pa­tient med­ic­al treat­ment received at des­ig­nated health­care insti­tu­tions, and gen­er­ally cov­ers med­ic­al ser­vices and drugs, tests and invest­ig­a­tions which are neces­sary for dia­gnos­is or treat­ment of a med­ic­al con­di­tion and ordered by a doc­tor.
b) Screen­ing tests that are cur­rently under the Integ­rated Screen­ing Pro­gramme. This includes recom­men­ded screen­ings for selec­ted chron­ic dis­eases and can­cers.
c) To sup­ple­ment oth­er out­pa­tient uses of Medis­ave. This includes the new $300 lim­it for out­pa­tient scans that was imple­men­ted on 1 Janu­ary 2015, the exist­ing $400 Mediave400 lim­it[1], the vari­ous lim­its for can­cer treat­ment and dia­gnostics, and oth­er out­pa­tient with­draw­al lim­its. In addi­tion, the eld­erly can also use it to pay for the 15% co-pay­ment when using Medis­ave for chron­ic dis­ease treat­ment.

Termed Flexi-Medis­ave, a patient can use up to $200 from his own Medis­ave or tap on his spouse’s Medis­ave, as long as the spouse is also aged 65 and above.